Yost v. Justin Belt Co.

488 S.W.2d 850, 1972 Tex. App. LEXIS 2116
CourtCourt of Appeals of Texas
DecidedDecember 1, 1972
DocketNos. 17356, 17361
StatusPublished
Cited by5 cases

This text of 488 S.W.2d 850 (Yost v. Justin Belt Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Yost v. Justin Belt Co., 488 S.W.2d 850, 1972 Tex. App. LEXIS 2116 (Tex. Ct. App. 1972).

Opinion

[853]*853OPINION

MASSEY, Chief Justice.

Appeals, consolidated, are from a judgment in a suit for declaratory relief filed by those who were plaintiffs, and from a temporary injunction order sought by way of cross-action in behalf of those who were defendants in the declaratory judgment action. In the first instance those appealing were Joe Yost and Roger E. Souder. In the second they are Yost and Souder and also Tony Lama Company, Inc. In other words the original plaintiffs were dissatisfied with the declaratory judgment and appealed therefrom; and they, along with Tony Lama Company, were futhermore dissatisfied with the temporary injunction imposed upon them and appealed therefrom, as well. Also, those who were original defendants, and became cross-plaintiffs seeking injunctive relief, were dissatisfied with what they deem to have been the trial court’s reformation of that same contract relative to which plaintiffs sought their declaratory relief, and attack such reformation by a cross-point on appeal. They were Justin Belt Company, Inc., and H. J. Justin & Sons, Inc.

Judgment affirmed in part, in part reformed and as reformed affirmed, and in part reversed and rendered as applied to injunction. Judgment awarding declaratory relief is reversed and rendered.

We will attempt to simplify the case by an initial consideration of what the parties mistake as the trial court’s reformation of the contract in question. In our opinion the trial court’s action was one which merely declared rights of the parties under the contract upon the assumption that it was valid. As will later be seen we hold the contract to have been invalid and to furnish no support for declaratory relief.

It simplifies our description of the factual background and law controlling the case to view it merely as an appeal by Roger E. Souder, Joe Yost, and Tony Lama Company, Inc., from a decree of temporary injunction granted upon the application of Justin Belt Company, Inc., and H. J. Justin & Sons, Inc.

The contract in question was one wherein, in consideration of the dismissal with prejudice of a certain suit for injunction theretofore filed by Justin Belt and H. J. Justin, both Joe Yost and Roger E. Souder agreed not to do certain things or to commit certain acts. On the fifth numbered of these the Tony Lama Company, Inc. (who was not a party to the suit dismissed) joined therein with Yost and Souder and agreed that from and after the contract date it would not “employ any person who shall be employed by either JUSTIN BELT COMPANY, INC. or H. J. JUSTIN & SONS, INC.” The agreement of Yost and Souder included their promise not to engage in the boot business or manufacture thereof, not to use or communicate any confidential information or trade secrets of Justin Belt or H. J. Justin obtained during the course of a prior employment of both Yost and Souder, not to criticize or impugn Justin Belt or H. J. Justin or any of their products, not to use any special equipment and/or techniques which shall have been developed in the plants operated by Justin Belt and H. J. Justin, and other negative covenants of like tenor.

As is readily perceived Yost and Souder contracted, or purportedly contracted, to refrain from engaging in a particular competitive business, the boot business, by an agreement independent of and in no way ancillary to any other contract. Most assuredly was there a total absence of an-cilarity to any other contract for the transfer of goodwill or other subject of property, and at time of the contract neither Yost nor Souder was an employee of either Justin Belt or H. J. Justin.

Since Texas has followed the law as expressed in Restatement of the Law, Contracts, Sec. 515, “When a Restraint of Trade Is Unreasonable”, we will quote the portions of the text of the Rule set forth therein applicable to the instant case: “A [854]*854restraint of trade is unreasonable, in the absence of statutory authorization or dominant social or economic justification, if it

“(a) is greater than is required for the protection of the person for whose benefit the restraint is imposed, or

“(b) imposes undue hardship upon the person restricted, or

“(d) unreasonably restricts the alienation or use of anything that is a subject of property, or

“(e) is based on a promise to refrain from competition and is not ancillary either to a contract for the transfer of good-will or other subject of property or to an existing employment or contract of employment.”

We also quote from Restatement of the Law, Contracts, Sec. 516, “Instances of Reasonable Restraints”, in part, as follows: “The following bargains do not impose unreasonable restraint of trade unless effecting, or forming part of a plan to effect, a monopoly:

“(a) A bargain by the transferor of property or of a business not to compete with the buyer in such a way as to injure the value of the property or business sold;

“(b) A bargain by the buyer or lessee of property or of a business not to use it in competition with or to the injury of the seller or lessor;

“(f) A bargain by an assistant, servant, or agent not to compete with his employer, or principal, during the term of the employment or agency, or thereafter, within such territory and during such time as may be reasonably necessary for the protection of the employer or principal, without imposing undue hardship on the employee or agent.”

In view of the recitations of law under the Restatement (Sec. 515, Subdivision (e)) and its application to the facts and circumstances of the case, we hold that the trial court erred — even on temporary injunction to preserve the status quo — in its enjoinder of Roger E. Souder from engaging in the boot business. Only Souder was thus enjoined. It is obvious that Souder’s negative covenant was against public policy as a promise to refrain from competition, his promise not being ancillary to any contract for the transfer of any good-will or other property or property-right, or to an existing employment or contract of employment.

In Williston on Contracts, Revised Edition, p. 4578, Ch. XLVIII, “Illegal Bargains: Contracts in Restraint of Trade”, Sec. 1635, “Reasons for holding restraint invalid”, we observe the underlying philosophy of the rule to have been founded upon the mischief which might arise from such restraints, 1st, to the party, by the loss of his livelihood, and the subsistence of his family; 2nd, to the public by depriving it of a useful member. It is noted that in the United States our law has been chiefly concerned with the injury to the public— not that arising indirectly from the injury to the promisor, but that arising from lack of competition, with the consequent tendency to at least a partial monopoly owing to the withdrawal of the promisor from the field. Furthermore if such a bargain affects interstate trade or commerce, as obviously is the circumstance in the instant case, its validity will be judged by Federal law and not by that of the state where it was made.

We will quote from the section following, Sec. 1636 (on p. 4582), “Reasonableness of restraint”, as follows: “Finally, even though neither of the foregoing objections exists, the effect of the promise on the public interest may be such as to make enforcement contrary to public policy. In considering the nature of this last objection, it must be recognized at the outset that the purpose of any restrictive agreement is [855]

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Cite This Page — Counsel Stack

Bluebook (online)
488 S.W.2d 850, 1972 Tex. App. LEXIS 2116, Counsel Stack Legal Research, https://law.counselstack.com/opinion/yost-v-justin-belt-co-texapp-1972.